Chapter 7

DEVELOPED COUNTRY POLICIES

Domestic Farm Policy Reform and Global Food Security

Developed country farm support policies—including high tariff and support prices—that insulate producers from market prices often lead to overproduction and depressed global prices.
Low-income farmers lose when they compete against subsidized production, and developing countries may face increased malnutrition, food insecurity, and adverse consequences for rural development.
Postwar support levels were high, but the 1994 Uruguay Round of trade negotiations drove substantial reforms that lowered OECD support levels and shifted policies toward less distortionary mechanisms.
Despite this progress, removing support policies has proven politically difficult, and total support remains high at over US$228 billion as of 2016.

Currently, less than half of OECD support is linked to production, but reform has stagnated, and some distortionary forms of support such as subsidized insurance are expanding.
Recent policy discussions in the United States and European Union suggest that past reforms may be
weakened, and large emerging economies—Brazil, China, India, and Indonesia—are increasing distortionary forms of farm support, including input and investment subsidies.
The real beneficiaries of reforms to farm support are those who are most vulnerable—poor producers in developing countries.

Further reduce agricultural distortions in global markets to allow developing-country producers to capitalize on their comparative advantages in order to improve incomes and reduce rural poverty and malnutrition.
Avoid adopting agricultural subsidy policies, given how difficult it is to remove them.

Pursue reforms of domestic farm support even in the absence of multicountry agreements since these reforms have multiple benefits.